OCBJ Spotlights CBC Surpassing $1 Billion in Assets

ash patel in front of a building that says Commercial Bank of California

Irvine-based Commercial Bank of California recently celebrated a milestone—passing $1 billion in assets.

“It’s a big deal,” Chief Executive Ash Patel told the Business Journal.

“It’s a target for economies of scale. When you go to a billion, there are a whole bunch of new controls, audits. Banks always have this dilemma.”

When Patel began at the bank six years ago, the bank’s assets were about $216 million, and it ranked No. 15 on the Business Journal’s annual list of locally based banks. As of June 30, it reported assets of $977.8 million, ranking it seventh biggest. Its assets exceeded $1 billion as of Sept. 30.

“It’s a hard milestone to accomplish,” he said.

Banker’s Years

Patel has been a banker in Orange County for more than three decades. In 2001, he founded Premier Commercial Bank in Anaheim and was president and chief operating officer until its sale to Encino-based California United Bank for $38 million in 2012.

Patel took the top spot at CBC in 2013. Its board is stocked with influential local executives, including Chairman Paul Folino, former chief executive, president and chairman emeritus of Emulex Corp., and Alex Meruelo, a developer and entrepreneur who founded the La Pizza Loca chain.

Also on the board is William H. Lyon, executive chairman of William Lyon Homes (NYSE: WLH), which is being sold for $2.4 billion in cash and stock to Taylor Morrison Home Corp. (NYSE: TMHC). Lyon is the son of the founder, General William Lyon, who is a director emeritus at CBC.

The bank’s owners last year took it off publicly traded markets, where it was a thinly traded stock with a market cap around $134 million.

Deploying Capital

The move meant the bank no longer had to focus on quarterly profit measures and could boost investments, such as spending about $2 million annually to boost technology. It’s been studying blockchain technology to handle international transfers more quickly and robotics that can do repetitive, mundane tasks.

The investments are part of Patel’s goal to move CBC away from being a traditional bank into a diversified financial services and technology company.

For example, it can build a web portal that allows a property management firm to more efficiently collect rent online instead of through checks. CBC has emphasized using a system called automated clearing house (ACH), which is far less expensive than checks, wire transfers or credit cards.

The bank this month hired Jon Lakatos as senior director of business development and strategic partnerships to focus on growing CBC’s payments solutions team. Lakatos was the director of business development at Processing.com where he helped niche industries and businesses start electronically processing as much as $10 million monthly. Previously, Lakatos served as a director of business development at eMerchantBroker.com.

Asset Growth

The efforts integrate under Patel’s “Purposeful Journey to a Billion” initiative, with the bank focused on client needs rather than directly on profits.

Other boosts to growth included the 2016 acquisitions of National Bank of California and VeriCheck, a fintech payments firm.

In the past year, CBC has grown its OC employee count 60% to 101. Its companywide total has grown 40% to 161 employees. Deposits topped $900 million at the end of the third quarter, up 11% from a year ago and nearly 400% more than when Patel started in 2013.

By comparison, aggregate deposits of all banks in Los Angeles and Orange counties grew by 47% over the same period, according to the bank, which has concentrated on lending to small to medium-sized hospitality, healthcare, education and automotive businesses.

$2B Goal

As a banker, Patel sees the local economy up close.

OC “seems to be doing well,” Patel said. “It’s extremely resilient.”

People see “a slowdown, but not a recession. We feel the economy is strong and will continue to be robust.”

Patel said the bank will continue its current strategy; its new goal is of course $2 billion in assets.

“You cannot afford to stay at $1 billion. You have to grow to $2 billion.”

The nearest OC competitors larger than CBC as of June 30 are Costa Mesa’s Pacific Mercantile Bank, ranked No. 5 with $1.4 billion in assets, and Irvine’s Sunwest Bank, ranked No. 6 with $1.3 billion.